Tuesday, July 3, 2012

Today is the 4th of July and time that we celebrate our freedom as Americans and those who have given so much to keep us free. Thank you to all who have served.

The celebration gives us pause to consider our financial freedom. What is your definition of financial freedom? One definition of financial freedom (financial independence) is when your passive income exceeds your expenses. You no longer have to work another day in your life for money as all of your financial needs are met from the income of your investments.

For many of us, we work the greater share of our life to save for retirement – hopefully the point of our financial freedom. Our retirement savings, along with social security hopefully provides enough income that we don’t need to supplement our income with another job.

When you think about retirement and financial freedom, how much money do you need to live the life you want? Are there avenues to reach your financial freedom sooner? Increase your level of investment? Do you have options to reduce spending? (i.e., reduce living expenses and improve your overall health by eating fresh produce from a home garden, using public transportation or riding your bike to work or school). Maybe your financial 4th is sooner than you think. How much do you really need to be happy?

Financial freedom and independence can be reached sooner by saving more, spending less or a combination of two. Can you reduce your spending and increase your savings to reach your financial 4th of July sooner?